Between: CHESTERMAN
And: FEDERAL COMMISSIONER OF TAXATION

Judges: Knox CJ
Isaacs J
Higgins J
Rich J

Starke J

Subject References:
Succession
Estate duty
Exemption
'Charitable purposes'
Annuity

Legislative References:
Estate Duty Assessment Act 1914 (No 22) - the Act

MELBOURNE

Decision by:
STARKE J

"The difficulty in this case," to use the words of Lord Buckmaster in Attorney-General for New Zealand v Brown, ^[F59] "lies in determining the exact values to be given to a series of words" in the Estate Duty Assessment Act 1914, No. 22, s. 8, sub-s. 5, providing that estate duty shall not be assessable or payable upon so much of the estates of persons dying after the commencement of the Act "as is devised or bequeathed or passes by gift inter vivos or settlement for religious, scientific, charitable or public educational purposes." The Peter Mitchell Trust is clearly not for a religious or a scientific purpose, and the case depends therefore upon the construction placed upon the words "charitable or public educational purposes." Charitable purposes and charitable trusts are well known terms in English law. In Pemsel's Case ^[F60] Lord Macnaghten classified the objects which in a legal sense fall within the terms "charity," "charitable purpose" or "trust." But, as Lord Herschell pointed out in Scott's Case, ^[F61] "each statute must be looked to by itself for the purpose of ascertaining its meaning." Exemptions from taxation, granted by this Act, of gifts, etc, for religious, scientific or public educational purposes, cover a large number of "charities" in the strict legal sense. Does this suggest an intention on the part of the Legislature to again include, for greater caution, in the words "charitable purposes" objects of charity which it had already provided for by other words? Or does it suggest that the intention was to provide for "something that did not embrace" those objects? It may be said that the words "religious" and "scientific" purposes embrace a great number of objects that are not charitable in the legal sense. But if this be so, then we have the case of a taxing Act, designed to raise money, creating exemptions based upon no principle of public policy, or indeed upon any rational principle whatever. Such exemptions would include not only "any gift which proceeds from a philanthropic or benevolent motive, and which is intended to benefit an appreciably important class of our fellow-creatures (including, under decided cases, animals), and which will confer the supposed benefit without contravening law or morals" (In re Cranston, ^[F62] approved in In re Wedgwood ^[F63] ), but also an indefinite range of objects covered by religious and scientific purposes that are not charitable in the legal sense, and would not necessarily serve any public purpose. In my opinion, the true meaning of the words "charitable purposes" in the statute now before the Court cannot be better put than in the words of Lord Herschell in Pemsel's Case. ^[F64] "I certainly cannot think," says the noble and learned Lord, "that they"-the words "charities" and "charitable purposes"-"are limited to the relief of wants occasioned by lack of pecuniary means. ... I think ... that the popular conception of a charitable purpose covers the relief of any form of necessity, destitution, or helplessness which excites the compassion or sympathy of men, and so appeals to their benevolence for relief. Nor am I prepared to say that the relief of what is often termed spiritual destitution or need is excluded from this conception of charity." Tested by this standard, the Peter Mitchell Trust is not exempted from taxation under the Estate Duty Assessment Act. Nor, if it failed, is the trust for such non-sectarian charitable uses, purposes or institutions as his trustees should decide upon, in any better position, for that trust must be construed in the legal sense of a charity and is beyond the sense of the statute.

I entertain some doubt whether the "Peter Mitchell Trust," so far as the gifts to the persons and for the purposes mentioned in the second schedule of the testator's will, cannot properly be described as a gift for public educational purposes within the meaning of the Act. But the essential idea of education is training or teaching. The Peter Mitchell Trust lacks, in my opinion, this element. No provision is made for training or teaching the proposed recipients of his bounty, but prizes are given for those who have already reached the strange standard of fitness and education propounded by the testator.

The other questions in this case should be answered:

2. Part of the estate of the testator passes to the widow, but it must be ascertained by valuation, and regard must be had to the fact that the annuity is defeasible.

3. Yes.

4. No.

5. The value of the annuity is a question of fact, and should be so determined.